Understanding management accounting techniques in the context of organizational change: as strategic business partners with a responsibility to improve operations, management accountants must identify techniques that support incremental change and h
elp transform their firm.
EXECUTIVE SUMMARY Driven by the need for organizational change, management accounting techniques have developed and proliferated at an unprecedented rate in the last few decades. Some critics, however, have charged that the changes are a "reinvention of the wheel" every few years. To put these issues in perspective, let's look at a framework created to illustrate the distinctive nature of these techniques in an organizational change context. The framework considers such factors as user resistance and organizational culture that can influence the applicability and implementation success of the techniques.
After tracing the history of management accounting beginning in 1850, accounting scholar Robert S. ...view middle of the document...
The pendulum swung in the other direction over the next decade as a plethora of new "techniques" in the management accounting area, for example, activity-based costing (ABC), Just-in-Time (JIT), and total quality management (TQM), subsequently found their way into general acceptance. Critics assert, however, that these management accounting techniques overlap and amount to "reinventing the wheel" every few years. (3) The objective here is to assimilate into one framework several factors that influence the application of management accounting techniques in organizations using types or levels of organizational changes categorized by N. Venkataraman. (4) The underlying goal for the framework is designed to reveal the distinctiveness of each technique in the organizational change context. Specifically, is there a systematic approach to applying change techniques and anticipating issues we may encounter in the change process? The application of this framework is illustrated using detailed case studies.
DEVELOPING THE FRAMEWORK
In the new environment created by the power of computing and the displacement of traditional accounting tasks, companies are looking to their financial experts to "act as business partners with operations managers" by providing information to support decision making. (5) Accountants are increasingly involved in strategic management through the development and implementation of new accounting models integrating financial and nonfinancial information. (6) If the substance of the techniques overlaps, accountants need to clarify these overlapping areas to show how they may apply to support different strategic purposes.
Fundamental to organizational strategy is organizational transformation and change. Organizational transformation and change is an ongoing process, and accountants need to see their role in supporting such change. Firms continue to frame their strategy to respond to rapid changes created by globalization and technology. From a strategic purpose, therefore, firms are in a constant state of transformation and seldom reach a state of equilibrium. The nature of internal change and the techniques applied, however, will vary based on such factors as the nature of the change and influential factors internal to the organization.